If i buy a second home at the beach and three months later decide to rent it out what are the consequences

One of the documents you will sign at escrow is an affidavit wherein you acknowledge that you are purchasing this home for personal use and that renting it out is prohibited. Should you purchase as a second home, sign the affidavit and rent it out anyway, technically you are committing fraud. Because there has been so much fraud, many banks and loan servicers are now hiring people/firms to do "surveys" where someone actually visits the property unannounced looking for signs of fraud. I personally know of a homeowner who bought a home, calling it a primary residence and less than six months after purchase, a "Tenant" answered the door. The bank called the note due based on material misrepresentation and turned it over to the FBI's Fraud task force for prosecution. There are a lot of ways to get tripped up, and trust me; the big banks are not going to be the fall guy for any of the mortgage mess. Instead, they are looking for people like you to make a mistake and then they will make you the poster child for fraud. If you are asking the question, it means you are thinking about it. My advice is this: If you are thinking you may want to rent it out at some point, then call it an investment property and then you can do what you want without having to keep looking over your shoulder. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com 888-889-9950

Loan fraud...your note could be called due, the lender will give you 30 days to satisfy the lien or they will initiate foreclosure... most states it takes 90 days to complete a foreclosure.. That's the least of your problems.. as Bert stated.. They could also report you to the FBI as a mortgage loan fraud investigation case.. Just not worth the risk..I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

Mortgage Fraud - That is the answer. When you buy and claim it as an "owner occupied property", you are also signing a document that says it will be an owner occupied property for at least one year. Occupancy fraud is high on the list of mortgage fraud, as people are constantly trying to get around the tougher rules, and higher rates of non-owner occupied (ie: investment) properties.

Bert's answer is very accurate. However, there are circumstances that are considered "good reasons". For example, You work for a major corporation, and you purchase a home near your work location, and then a few months later you get transfered across the country. That would not be considered fraud if you then decided to rent out the home because your circumstances drastically changed from the time you recieved the loan. Do things the right way and always be honest, if you live by that then you will never get in trouble.

That would be mortgage fraud.